The Wall Street Crash of 1929Dr David Rees

From the Roaring 20’s

To collapse in the 30’s

The Countdown

Monday 21st October ● Ticker falls 1h40m behind 3rd greatest volume of trade in historyThursday 24th October (Black Thursday) ● Panic sets in as some sales find no buyers (air holes)● 11 well-known speculators commit suicide● 12h30 – the visitors' gallery of the Stock Exchange is closed● The richest bankers meet and decide to pool their resources and buy● Stocks recover as spare cash finds bargain shares. Ticker 2h late

Monday 28th October ● Slide to the bottom and no bankers' rescue

Tuesday 29th October –● Most devastating day in the history of Wall Street. Air holes everywhere ● A messenger boy buys a block of White Sewing Machine shares

(previously 48$) for 1$ a share.● The bankers start selling as well.● Credit based on shares dries up – lack of liquidity

Clerks in downtown hotels ask clients if they want the room for sleeping or jumping.

Stocks lose 90% of their value over 4 years

Times Industrials November 13th 1929Value: 224

October 28th 1929Value: 28

US Steel September 1929Value : 262

July 1930Value : 22

General Motors September 1929Value : 73

July 1930Value : 8

Montgomery Ward(retail companies)

September 1929Value : 138

July 1930Value : 4

American Founders(investment trust)

September 1929Value : 117

July 1930Value : 0.70

The crash blighted the fortunes of many hundreds of thousands of Americans (13m unemployed)

The Great Depression 1930's

Why did it all happen?

● Highly unequal income. The top 5% received 35% total income.By 1948 top 5 % less than 20 %

● The workers too poor to buy goods (NB Karl Marx!)

● The rich too rich to spend everything – spare cash to invest -but speculation more profitable than investing in industry

● Low interest rates● stimulates the poor to use credit and consume

● stimulates the rich to borrow to speculate

● Bad banking structure – independent banks, lack of regulations

Why did it all happen?

and the solution?

The Wall Street Crash of 1929Dr David Rees